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Gulf banks are expected to rely more heavily on private placements and syndicated loans if the Iran conflict continues, as volatility limits access to public debt markets, Fitch Ratings said. Private placements have exceeded $4.3 billion so far this year, mostly in senior debt.
Credit spreads widened after the conflict began before partially tightening, with senior and Tier 2 spreads rising modestly while AT1 spreads narrowed, the rating agency said in a report.
Saudi banks are expected to scale back dollar issuance more than previously anticipated as loan growth slows, while UAE lenders may increase supply to refinance about $4.4 billion of maturing debt, it said.
GCC banks raised about $17.5 billion in dollar debt excluding certificates of deposit in the first four months of 2026, rising around 20% YoY, driven largely by strong activity early in the year. Senior bonds accounted for the largest share, followed by CDs and capital instruments.
Emirates NBD’s additional Tier 1 bond sale earlier this month, the first public USD deal by a GCC bank since the outbreak of the conflict, was nearly 3x oversubscribed and priced without a premium, indicating continued investor demand.
Saudi’s Al Rajhi Bank recently raised $750 million through a Tier 2 sukuk private placement, upsized from $500 million, pointing to robust investor appetite.
Around $10 billion of AT1 debt is due for its first call in 2026, mainly in the UAE and Kuwait, with extension risk seen as low given strong capital ratios and reputational incentives to call the bonds, the report said.
Even if conditions stabilise later in the year, overall issuance in 2026 is likely to fall short of 2025’s record levels due to slower credit growth and wider spreads, the agency said.
(Writing by Ahmad Mousa; editing by Seban Scaria)
